New Delhi, Feb 10.
Stock market regulator SEBI on Friday told the Supreme Court that it was concerned over the losses caused to investors due to the fall-out of the Hindenburg report on Adani shares and was closely monitoring the recent developments.
SEBI also agreed under the court nudge, to reassess its existing regulatory mechanism in the light of the recent short-selling of Adani shares which led to huge losses to investors and a fall in the Nifty and Sensex, and suggest ways and means to further strengthen the regime.
A bench led by CJI D.Y. Chandrachud was dealing with two petitions filed regarding the Hindenburg report, one by lawyer Manoharlal Sharma and another by lawyer Vishal Tiwari.
Sharma sought criminal action against those responsible the developments while Tiwari sought an independent probe by a judge.
The bench, also comprising Justices P.S. Narasimha and J.S. Pardiwala, pointed out to SEBI that the stock market was no longer the preserve of the wealthy few, rather it was an attractive investment option for the middle class too.
The loss to the investors has been (estimated) around Rs 10 lakh crores, CJI Chandrachud observed. This was worrying when seamless capital flow is the norm and everyone is an investor,
“How do we ensure that this doesn’t happen in the future? What role should be envisaged for SEBI in the future?” the CJI asked SEBI, which was represented in court today by Solicitor General Tushar Mehta.
The bench clarified that it was not casting any doubts over SEBI’s regulatory processes or the existing regime, but only wanted to prevent a repeat of such things in the future.
The CJI called for an evaluation of the existing regulatory regime, the factors behind the recent developments and a recasting of the procedures to plug such happenings.
In this context, the CJI called for immediate consultations with experts from the securities markets, former judges, and international finance law.
The recent developments have lead to a lot of volatility in the markets and also caused worry over the state of several banks with exposure to the Adani group.
Mehta assured the court that the regulator was also closely monitoring the situation. He promised to get back to the court on Feb 13, 2023, on steps taken so far and on the court’s suggestions.
